In Depth

Note: This story has been edited to reflect a change by the 7th Circuit Court of Appeals Sept. 22, 2011.

In an appeal of the denial of a proposed class-action lawsuit based on the finding the attorney was inadequate to represent
the class, the 7th Circuit Court of Appeals noted that the attorney’s demeanor on appeal didn’t help his cause.

In Blanca
Gomez and Joan Wagner-Barnett v. St. Vincent Health Inc., No. 10-2379, Blanca Gomez and Joan Wagner-Barnett, former
employees of St. Vincent Health, appealed the District Court’s decision to not certify the proposed class, the denial
of the plaintiffs’ requests for statutory penalties, and the amount of damages awarded to Barnett in their suit alleging
St. Vincent violated the notice provisions regarding how the two could extend their health insurance coverage within the period
prescribed by statute.

Before this case was filed, the District Court dismissed a similar suit, Brown-Pfifer v. St. Vincent Health Inc.,
No. 1:06-CV-236, 2007 WL 2757526 (S.D. Ind. Sept. 20, 2007), in which those who did not timely receive their COBRA notices
sued St. Vincent. During May 2004 and January 2006, nearly 266 of the 1,570 people who received health benefits from St. Vincent
and experienced qualifying events didn’t receive timely COBRA notices. The same attorney in Brown-Pfifer, Ronald
Weldy, was the attorney in the instant case.

Instead of appealing the dismissal of Brown-Pfifer, the case was re-filed with two new named plaintiffs, Gomez and
Barnett. U.S. Judge Sarah Evans Barker found the proposed class counsel would inadequately represent the proposed class, and
denied class certification. Ruling on the plaintiffs’ individual claims, the judge awarded no damages to Gomez, as she
had testified that she wouldn’t have purchased the COBRA coverage even if she had received the notice on time. Judge
Barker awarded Barnett, who testified she would have purchased the coverage and had medical expenses after her employment
ended with St. Vincent, $396 in damages. Judge Barker also declined to impose statutory penalties against St. Vincent.

The 7th Circuit Court of Appeals affirmed the lower court in all respects, even though it had some reservations about the
District Court’s determination that “such other relief” that may be awarded under the COBRA notification
enforcement provision could include an award of medical expenses incurred as a result of the COBRA notification violation,
minus deductibles and premiums the beneficiary would have paid to get coverage under COBRA.

“While we are reticent to condone without limitation this method of compensation in COBRA-notification violation cases,
we find no error in this particular case. The district court awarded the monetary damages pursuant to subsection 1132(c)(1)’s
‘such other relief’ provision, and the award does not contradict the section’s plain text,” wrote
Judge Michael Kanne.

They also affirmed the decision to not impose statutory penalties against St. Vincent, noting the case lacks any evidence
of an administrator’s bad faith or gross negligence.

Finally, the judges affirmed the decision that the plaintiffs’ counsel wasn’t an adequate representative of the
class. Judge Barker found that Weldy’s actions during his attempts to represent the proposed classes in both suits didn’t
make him an adequate class counsel. In Brown-Pfifer, another judge found, among other things, that Weldy wasn’t
diligent in prosecuting his proposed class action. In the instant case, he had been ordered to pay expenses in conjunction
with St. Vincent’s motion to compel.

The judges found Weldy’s arguments on appeal to be unpersuasive.

“If counsel wished to convince us that the district court abused its discretion by finding him inadequate to represent
the proposed class, his demeanor on appeal has not helped his cause. He has (perhaps mistakenly) misrepresented fundamental
facts. And he has relied on hyperbole in the place of persuasive argument, failing to refute the district court’s reasoning,”
wrote Judge Kanne.

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